Final 2027 Medicare Fee Schedule Deepens Physician Pay Cuts
By Phil West

Despite outcry from organized medicine and a subsequent outpouring of public comment, the Centers for Medicare & Medicaid Services (CMS) released the final version of its 2027 Medicare Physician Fee Schedule Nov. 4 with deeper payment cuts than initially proposed.

CMS’ proposed rule floated a 1.68% conversion factor cut affecting most physicians and a 1.19% conversion factor cut for qualifying physicians participating in an alternative payment model (APM). The final rule deepens both: a 2.31% cut for most physicians (dropping the conversion factor from $33.40 to $32.63) and a 1.83% cut for APM participants (dropping their conversion factor from $33.57 to $32.95), according to the CMS fact sheet.

“[The continued conversion factor cuts do] not represent reality in terms of what’s happening to our practices and how we take care of patients, and it's a complete disconnect in terms of the inflationary world,” said Texas Medical Association President Bradford W. Holland, MD, raising serious concerns regarding physician practice viability and patient access to care.

TMA’s Sept. 14 comment letter on the proposed rule opposed the resumed physician payment reductions. Beyond the conversion factor cuts, CMS’ final decisions on core issues included:

• Moving forward with a 20% payment reduction, rather than the proposed 50%, for the lower-valued service when billing a separately identifiable office or outpatient evaluation and management (E/M) service on the same day as zero-day global procedures using modifier 25. The final rule applies only when the same physician or a physician of the same specialty in the same group practice provides both services;
• Moving forward Jan. 1, 2027, with the Ambulatory Specialty Model, a five-year mandatory pilot affecting approximately 960 Texas physicians treating patients with heart failure or low back pain, despite concerns about the limited time physicians have to prepare and the potential for significant Medicare payment penalties;
• Retaining – but delaying until 2029 – a proposed third-party vendor restriction on remote patient monitoring (RPM) and remote therapeutic monitoring (RTM), so that services including device supply or patient education and setup are paid only when furnished by clinical staff directly employed by the physician or the physician’s practice;
• Going forward Jan. 1, 2027, with other RPM changes, including requiring clinicians to schedule a separately reportable initiating visit when a patient begins RPM or RTM;
• Converting the G2211 visit complexity add-on code to a new modifier that increases payment for eligible associated E/M services by 16%, along with a separate modifier that provides a 32% increase for eligible physicians participating in Medicare accountable care organizations (ACOs); and
• Delaying by two years, until 2031, the transition from traditional Merit-Based Incentive Payment System (MIPS) reporting to MIPS Value Pathways (MVPs), while finalizing three new MVPs focused on diabetes, hypertension, and hospitalist care.

CMS made the final version of its modifier 25 change less onerous than first proposed, but Dr. Holland says organized medicine still needs to advocate for patients affected by the change.

In the final rule, CMS reduced payment by 20%, down from the proposed 50%, for the lower-cost service when a physician provides a separately identifiable E/M visit on the same day as a procedure. The provision now applies only to zero-day global procedures when the same physician, or a physician of the same specialty in the same group practice, provides both services. The proposed rule would have applied the cut to zero-, 10-, and 90-day global periods. 

TMA strongly opposed this proposal in its formal comments, noting that the policy could negatively impact coordination of care, access to care, and delay treatment, while also increasing travel time, cost, and scheduling burdens.

“The improvement in the lessening of the cut in the 25 modifier was a public pressure phenomenon, so I do think there’s some benefit to our effort,” Dr. Holland said, though he says organized medicine will keep pressing CMS to revisit the issue.

According to the Federal Register, CMS received close to 45,000 public comments on its proposed rule.

Dr. Holland anticipates organized medicine will now turn to Congress for legislative relief from the continuing cuts.

“It’s very clear to me that to get out from under the constant oppression of the past quarter century, we need to be in the legislative halls and not [just] in the regulatory halls,” Dr. Holland said.

Read more about the Provider Reimbursement Stability Act of 2026 (H.R. 8163) and the Patients First Act (H.R. 9693), two bills before Congress that address Medicare physician payment.

TMA will continue to analyze the final rule and its implications for Texas physicians, with more detailed coverage of these and other changes in upcoming issues of Texas Medicine Today.

CMS Fact Sheets
Calendar Year 2027 Medicare Physician Fee Schedule Final Rule
Medicare Shared Savings Program
Quality Payment Program